Only five or 10 percent of all stolen works of art, antiques, furs, jewelry, silver and other valuables is ever recovered, according to the Federal Bureau of Investigation.
That’s not a great record, but at least that small group of collectors should be happy: They’ll get their objects back. Or will they?
Many pieces are recovered months or maybe years after the thefts, and often an insurance claim has been paid. In such an instance, the insurer has title to the object and can do with it as the company likes.
These companies may offer the pieces back to the original owner in exchange for the amount of the claim, maybe more or less, or just put the work up for sale at auction.
There are many options, but since the odds are that a collector will never again see something stolen from him or her, insurance agents advise that it is wise to have special insurance coverage for valuable objects such as antique furniture, artworks, coins, jewelry, Oriental rugs, silver or stamps.
There are two types of insurance protection for valuable objects: a fine arts rider attached to your homeowner’s policy or a separate fine arts policy.
Both types of policies protect owners of pieces that are likely to increase in value. Ordinary homeowners’ policies assume that whatever one has will never be worth more than the amount one paid for it and, in general, depreciate the values of objects.
Riders are often used for items of up to $500,000 in value, but, above that amount, “a lot of insurers don’t want to handle large collections, especially as part of a homeowner’s policy,” said Bruce Guthrie, account manager for fine arts at Huntington Block, the Washington, D.C.-based insurance company. “They will recommend that the homeowner obtain a separate fine arts policy to insure just the collection.”
The two types of policies are similar in terms of the protections offered and the requirements by the insurer of the collector. One difference that is sometimes found is for breakage: The homeowner’s policy, even with a rider, may not cover the full extent of damage to a valuable vase that a dog knocked over, for instance, while stand-alone or “monoline” fine arts policies usually do.
With either a fine arts rider or a separate fine arts policy, an appraisal is usually required for individual pieces or an entire collection to determine the amount of insurance needed, and premiums are calculated accordingly. It is also possible to “schedule” objects, so that insurance coverage and premiums go up a certain percentage periodically.
Salomon Brothers, the New York City-based investment firm, charts the relative values of various investments, such as stocks, bonds and commodities, among which are gold, silver, art, Chinese jade and precious gems. Art, jade and gems have continually topped these annual lists, increasing an average of 15 percent a year. That may aid one in finding an appropriate level for scheduling insurance coverage increases, though collectors are free to choose whatever percentage they prefer.
The values of objects must be within reason, however. One cannot simply purchase, say, a number of pieces of Depression glass and, based on a hunch that they will soon dramatically rise in value, insure them at 10 times the amount one paid. “The insurance company would probably get a little suspicious at that,” said Jim Mellors, an insurance adjustor for the Chubb Group.
It is up to the homeowner to have his or her objects evaluated by a reputable appraiser who is considered an expert in the particular collectibles area.
The insurer will be likely to accept the appraised value, basing premiums on this, but companies want to see that the appraiser has appropriate credentials. The American Society of Appraisers (P.O. Box 17265, Washington, D.C. 20041, 800-272-8258) has a free brochure, “Questions and Answers About the Appraisal Profession,” which notes how to find an appraiser, how to check that person’s credentials and the society’s code of ethics for members. Both the American Society of Appraisers and the Appraisers Association of America (386 Park Ave. South, Suite 2000, New York, N.Y. 10016, 212-889-5404) provide referrals for member appraisers with specialties in a particular area.
In the case of a homeowner with a variety of valuable objects, such as art, jewelry, rugs and silver, a generalist (known as an “estate appraiser”) may be recommended, or there may be a need for more than one appraiser. However, keep in mind that appraisers charge between $50 and $150 per hour for their work.
Charles Rosoff, a partner in the New York City-based Appraisal Services Associates, noted that “it is very important to tell an appraiser at the outset why you are getting something appraised, because an accredited appraiser may only do an appraisal for one purpose. If you are looking to sell the item, one needs to look at the data for selling in order to determine the fair market value.
“If you are looking to insure the item, one looks at the replacement cost. There is also something called the marketable cash value, if you had to sell the item right away instead of waiting for the fair market value. You get different values for all of these.”
A rider on a standard homeowner’s insurance policy is a relatively inexpensive addition, usually $50 annually for $10,000 in coverage. With separate fine arts policies, the price of the coverage is often less, sometimes as low as $20 for $10,000 worth of coverage.
Most homeowners’ insurance policies have deductibles, some of which are rather high. If a thief walks off with a fur coat or a fine art print, a $1,000 deductible may wipe out the possibility of a claim . Most fine arts riders and fine arts policies have no deductibles, and, therefore, everything is protected.
One effective way to reduce the premiums for both regular and fine art policies is to install some sort of burglary prevention or alarm system.
Applications for both fine arts riders and separate fine arts policies usually make a security survey, asking about the number of fire extinguishers and smoke detectors in the home, how many doors have deadbolt locks and whether there is a central station alarm system. The questions determine for the insurance company the potential risk and the premiums.
Collectors should photograph the objects they are insuring and place these photographs in a fireproof safe or bank safe deposit box along with the bill of sale and a sheet listing the object’s particulars. This may be used as evidence if the objects are later stolen or damaged.
Fine arts riders generally spell out such things as what is to happen if a stolen object for which a claim has been paid is recovered. Most homeowners would like to reserve the right of first refusal. They may not want the object back if it has been damaged or if they are happier with the money.
Most homeowners have some sort of “blanket” coverage for their objects, though it is usually less than the entire appraised value simply because the premiums would otherwise be too high. Art galleries, for instance, may have $1 million in insurance even though their holdings are twice that in value. The turnover in works makes it impossible for them to keep up with reappraisal and inventory requirements if the coverage were to be itemized.
Most insurance companies that offer homeowner policies will provide a fine arts rider or collectibles floater (the latter coverage is designed more for esoteric collections, such as political campaign buttons than art, antiques and jewelry). If one company doesn’t offer this type of coverage, others will.
